Last updated on August 8, 2023
Changpeng “CZ” Zhao, the CEO of Binance, recently shared a close call with a clever scam that could have cost the company $20 million. The incident highlighted the increasing sophistication of scammers in the cryptocurrency space.
The scam involved scammers generating addresses with the same starting and ending letters, which is what most people check when making a transfer. This tactic could easily fool users into selecting the scam wallet instead of the legitimate one. Some wallets even hide the middle part of the address, making it easier for scammers to deceive users.
In this particular scam, the scammers sent “dust” to the victim’s wallet. Dust refers to small fractions of a digital asset left in empty wallets. By sending dust to the victim’s wallet with an address that closely resembles the legitimate target wallet, scammers trick users into mistakenly selecting the scam wallet for a transaction.
Fortunately, in this case, the operator who fell victim to the scam realized the mistake immediately after the transaction and was able to request freezing of the funds in time. However, reclaiming the funds requires filing a police report.
CZ emphasized the importance of fast reaction in these types of recovery processes to prevent the funds from leaving with the scammers.
Some users responded to CZ’s tweet, sharing their own experiences of losing funds to similar scams. Others inquired about Binance’s support for the Ethereum Name Service (ENS), which could potentially eliminate the issue with fake crypto addresses.
On a separate note, Binance’s native token, BNB, has experienced a 3% drop, trading at $240 at the time of writing. This decline is not related to the scam incident but rather a broader retreat in the crypto markets. BNB has remained relatively flat since a significant drop in mid-June following a lawsuit from the Securities and Exchange Commission (SEC). The token has lost 22% since then and currently sits 65% below its all-time high.
In conclusion, CZ’s warning about the latest crypto scam sheds light on the evolving tactics used by scammers. It serves as a reminder for users to exercise caution when dealing with cryptocurrency transactions and to remain vigilant against potential scams.
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